Deal Reached on Taxing 'Cadillac' Plans

House Speaker Nancy Pelosi talks to reporters after a meeting with President Obama and House Democrats at the White House Jan. 6. (Reuters Photo)

The White House has reached a deal with health care negotiators, including labor unions, on taxing the high-level "Cadillac" plans that workers with high-risk jobs often purchase.

The excise tax on high-cost insurance plans has been one of the biggest sticking points in the negotiations, as President Obama has favored the Senate plan, which calls for the tax, while House Democrats have preferred raising taxes on high-income earners.

A senior Democratic official speaking on background told Fox News that the threshold for exemption would be raised from $23,000 to $24,000 per family but would remain the same at $8,500 for singles with high-value plans. Dental and vision plans would be removed from that calculation, however.

State and local workers and union members are exempted until 2017. Labor leaders endorsed the deal Thursday.

"Our people were very pleased by it," Gerald McEntee, president of the American Federation of State, County and Municipal Employees, said on a conference call. "We're for this health care reform and ready to fight for it."

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Richard Trumka, president of the AFL-CIO, said the deal reduces revenue raised from the tax from the $150 billion estimate in the Senate version to $90 billion. It is not clear how the $60 billion will be made up.

The value of the plans that are taxed would be indexed to the consumer price index plus 1 percent, meaning over time more and more people would be affected by the threshold than would be if the tax had been indexed to health care inflation. Health care spending in 2008, the last year for which the Centers for Medicare and Medicaid Services has data, rose at a historically low rate of 4.4. percent. Inflation was at 6 percent in 2007.

The White House did not comment on the deal on Thursday, with White House Press Secretary Robert Gibbs saying only that on Wednesday the president and Democratic members of Congress "made a tremendous amount of progress in bridging the differences that existed between the two pieces of legislation that have passed the House and the Senate."

"We may have more later in the day," Gibbs said.

The deal must be vetted with rank-and-file members, but the agreement would be a major win for Senate Democrats.

House Speaker Nancy Pelosi and House Majority Leader Steny Hoyer said in a joint statement Thursday that the final bill will be posted online for 72 hours before the House votes.

But Republicans blasted the way the negotiations have been conducted.

"The definition of irony," Michael Steel, a spokesman for House Minority Leader John Boehner, said in a statement Thursday. "Democratic leaders today emerged from a closed-door meeting to announce a backroom 'deal' on health care, then brag about the 'transparent process.'"